European markets edge higher

Stock markets recovered from an early slide in the wake of the weekend’s failure by oil producers to agree an output cut, when Saudi Arabia insisted Iran should take part but the latter refusing, writes Nick Fletcher. Tony Cross, market analyst at Trustnet Direct, said:

Oil producers failed to reach a consensus over limiting production at yesterday’s key meeting in Doha, leaving equities to start the week under something of a shadow, but the downside pressures are certainly looking to be remarkably short-lived.

The FTSE 100 and crude oil alike have pared earlier losses, something that could be seen as underlying just where the problem now lies regarding over supply of crude. Yes, Saudi Arabia may be threatening to ramp up output, but with demand stagnant and storage facilities running close to capacity, the argument is looking slightly academic. On top of this we have Opec set to reconvene in two months time, by which time Iran will have made some progress in terms of accelerating its production. This debate still has some distance to run and equity markets are applauding the fact it’s far from over.

An oil workers strike in Kuwait which cut the country’s output in half also gave some support to the crude price.

So Brent is currently down just 0.3% at $42.94 a barrel having earlier fallen as low as $40.1. On the European markets, the final scores showed:

The FTSE 100 finished up just 0.15% or 9.77 points at 6353.52, recovering from a low of 6261

Germany’s Dax added 0.68% to 10,120.31

France’s Cac climbed 0.26% to 4506.84

Italy’s FTSE MIB rose 0.55% to 18,358.25

Spain’s Ibex ended up 0.35% at 8881.6

But in Greece, the Athens market dipped 0.06% to 574.37

On Wall Street, the Dow Jones Industrial Average is currently 72 points or 0.41% higher.

On that note, it’s time to close for the evening. Thanks for all your comments, and we’ll be back tomorrow.

Oil is coming under more pressure at American investors reach their desks, pushing US and Brent crude down around 4%.

FXTM research analyst Lukman Otunuga says there’s an “undeniable feeling of disappointed” in the global markets.

Despite Iran’s absence in the meeting, expectations were high for a freeze deal to be struck, but the visible dispute between Saudi Arabia and Iran sabotaged all efforts consequently causing WTI crude to plunge more than 5%.

While realistically the effects of an output freeze would have had a minimal impact on the supply glut, even a symbolic gesture from OPEC to deal with the oversupply could have boosted optimism for future deals.

Investors are calculating that if Rousseff is ousted, a new government could promote more growth-friendly measures and overhaul tax and spending policies.

But Mihir Kapadia, CEO at Sun Global Investments, warns that the markets may have got too excited, given Brazil’s economic problems.

The issue now moves to the Senate as the drawn-out process continues its March towards what looks like an inevitable conclusion. Brazilian stocks are now up 23% in 2016 – that’s 43% up in US dollar terms - and this latest development is likely to add even more momentum to bonds, equity and the Brazilian Real.

In all likelihood we will see some profit-taking soon, as the market will start to focus on a post-Rousseff world where the economy must struggle through a deep and long recession.

Iran: Other countries should freeze output

Newsflash from Dubai: Iran has called for other oil producers to continue negotiating an output freeze.

Iranian OPEC Governor Hossein ‎Kazempour Ardebilli has told local media that production curbs are needed, but insisted that Iran won’t take part.

Reuters has the details:

“We support cooperation between OPEC and non-OPEC member countries and efforts to bring stability to the oil market, and we urge all producers to continue their negotiations,” Ardebilli said.

But he also said Iran had made it clear that it wanted to regain its share of the oil market lost when it was hit by economic sanctions, and that “its position is supported by most OPEC and non-OPEC members around the world”.

Bloomberg have just published an inside account of how the OPEC talks floundered yesterday.

It confirms that initial optimism waned once Saudi Arabia surprised attendees by insisting that any deal had to include Iran.

And with Iran stayed away from Doha, because they were unwilling to accept an output freeze, there was little chance of agreement.

Here’s a flavour:

In an apparent reference to Saudi Arabia, Russia’s Novak said at a press conference after the talks that some countries changed their position right before the meeting after agreeing to an earlier draft.

“I thought countries that came here, came to agree and not to discuss the need of joining in of those countries that were not participating,” he said. “We had been disputing today a lot, and that was because some countries from OPEC changed their positions in the morning.”

Oil clawing back from worst losses

The initial panic over the failure of the Doha talks may be easing, as oil recovers some of its early losses.

Brent crude is now trading around $42, down around 2.5% from Friday night. Still a chunky loss, but better than the initial 5% tumble.

Brent crude today Photograph: Thomson Reuters

Investors may be concluding that OPEC’s deadlock hasn’t really changed anything, especially as Saudi Arabia and Iran were always unlikely to emerge as best friends.

Mike van Dulken, head of research at Accendo Markets , explains:

Traders appear to be coming round to the understanding that although no deal came out of the weekend’s Doha oil production freeze meeting, we shouldn’t really have expected anything given the strong stances by Iran (‘not while we ramp up post sanctions’) and Saudi Arabia (not without Iran).

BremainBanker (@BrokenBanker)

Steady ticking up of oil from the Asia open no surprise. Yet to find anyone today who thought the outcome was unexpected.